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Look back | Former U of L dean Robert Felner sentenced to 63 months in prison

In 2008, when he first faced allegations that he stole millions of dollars from the universities of Louisville and Rhode Island, a defiant Robert Felner came out swinging. "Some people like me, some people

"Some people like me, some people don't," said Felner, the University of Louisville's former education dean.

But as he was sentenced Monday to 63 months in prison for his role in defrauding UofL and the University of Rhode Island of $2.3 million, Felner was much more subdued.

His hair noticeably grayer, it was a much different Felner than the self-assured and passionate education reformer who shrugged off complaints about his people skills as the result of his "Northern" ways and saucy language.

Felner — who was sentenced by U.S. District Judge Charles R. Simpson III in Louisville — pleaded guilty in January to nine federal charges, including income tax evasion.

As some UofL faculty members looked on, Felner responded quietly to Simpson's questions with answers of only yes or no.

Through his attorney, Scott C. Cox, Felner, 59, asked the judge to recommend he serve his time at a minimum-security prison camp in Montgomery, Ala. Prisoners at the camp, located on Maxwell Air Force Base, live in dormitory housing and work on the base.

Cox also asked Simpson to recommend that Felner take part in the Residential Drug Abuse Program because he has an alcohol problem. Participating in the program might also reduce the length of his sentence.

The Federal Bureau of Prisons will decide where Felner will be sent; Cox said that assignment should come in the next 45 days. Until then, Simpson allowed him to remain free on bond.

Once he has served his sentence, Felner will be on a three-year supervisory release.

Closure for colleagues

Some of the former UofL colleagues who attended Monday's sentencing said they are pleased that he will do jail time, although they still feel anger and resentment toward Felner and those who they say enabled his behavior.

"He was passed on by every university and supervisor he has ever had," said UofL education professor Thomas Simmons.

But the sentencing "does give me some closure," Simmons said.

University spokesman Mark Hebert released a statement that said: "Robert Felner is being punished for his crime and we expect to be fully compensated for the funds he stole. But our campus community ... really has moved past the turmoil Mr. Felner caused. Life goes on at UofL."

In addition to prison time, Felner must pay restitution of $510,000 to UofL, $1.64million to the University of Rhode Island and $88,750 to the Rock Island County Council on Addiction in Illinois. Simpson also fined him $900, $100 for each of the nine criminal offenses with which he was charged.

Property forfeited

Under his plea agreement, some of the money for the restitution will come from forfeited property in Florida and Illinois. Felner already has paid the court $212,233, which will be applied to the restitution, said Bryan Calhoun, the assistant U.S. attorney who prosecuted the case. An additional $449,000 that was seized may be applied to that amount, but that has yet to be decided by the U.S. Treasury.

Felner also must take part in a financial responsibility program while in prison; as part of that, Cox said, part of any money Felner makes while incarcerated will go toward restitution.

"He accepted responsibility for what he did by pleading. Everything about this case, the way it was handled today, was extraordinarily normal," said Cox, who described his client as "a very bright person with a ton of ability."

Cox said, "I hope that he serves the shortest possible sentence and comes out and is successful."

Felner reached his plea agreement with the U.S. attorney's office after being indicted in October 2008 on charges of mail fraud, conspiracy to commit money laundering, income tax evasion and conspiracy to impede and impair the Internal Revenue Service. The charges carried a maximum penalty of 75 years in prison.

Felner and his co-defendant, Thomas Schroeder of Port Byron, Ill., were scheduled to go to trial Feb. 1.

An Aug. 9 trial has been set for Schroeder, who has been charged with mail fraud, conspiracy to commit money laundering and conspiracy to impede and impair the IRS. He has pleaded not guilty. If convicted, Schroeder could face a maximum of 45 years in prison.

Felner's plea agreement does not require that he testify against Schroeder, although he could be subpoenaed to testify

Felner did not respond to a request for an interview Monday. Calhoun said he could not comment on the case because of the prosecution of Schroeder.

U of L suspected fraud

The Felner case became public in June 2008 after UofL reported suspected fraud to federal officials. The investigation involved the U.S. Secret Service, U.S. Postal Inspection Service, IRS and other federal agencies.

Initially, UofL officials credited Felner with turning around the College of Education and Human Development by improving teaching preparation and dramatically expanding its involvement in local public schools.

As the investigation proceeded, however, faculty members charged that Felner was vindictive, manipulative and threatening and drove away talented people.

The investigation also uncovered flaws in the school's grant oversight and business procedures. University officials said they have taken steps to fix the problems, including conducting audits, enforcing conflict of interest filings and reworking research procedures to ensure safeguards are in place to prevent fraud.

Federal prosecutors said Felner and Schroeder siphoned $2.3million from grants and contracts that should have gone to UofL and the University of Rhode Island, keeping the money for themselves.

The investigators said that between 2001 to 2008, Felner solicited business from school districts across the United States. The money from those contracts was supposed to go to the National Center on Public Education and Social Policy, which Felner founded at the University of Rhode Island.

Instead, Felner and Schroeder allegedly diverted about $1million from the Atlanta school district, $326,000 from Buffalo, N.Y., and $375,000 from Santa Monica, Calif., to a center that Schroeder founded in Illinois — and, eventually, into three bank accounts he and Felner controlled.

The surveys were done by the Rhode Island center, but the money never got to the university, according to the indictment.

Money came from grant

The indictment also accused Felner and Schroeder of sending about $100,000 in grant money from UofL to the Rhode Island center to pay for printing costs of surveys done for the school districts. The money allegedly taken from UofL involves $450,000 out of a $694,000 federal grant, and $126,000 from other funding sources.

The federal grant from UofL was supposed to support research on the federal No Child Left Behind Act, but the $450,000 ended up in a Louisville bank account controlled by Felner and Schroeder, according to prosecutors. They said Felner used the money in the account to pay personal expenses and make investments.

As part of the plea deal, Felner admitted that from June 2004 through July 2008, he and Schroeder fraudulently caused the Rock Island County Council on Addiction, which was headed by Schroeder, to make payments to Felner for work he never did. Schroeder was replaced at the council last year. He continues, however, to serve as president of the Riverdale School District, which serves Port Byron, Hillsdale, Cordova and Rapids City, Ill., and has 1,178 students.

In the plea deal, Felner also admitted evading federal income taxes for 2002 through 2007 and failing to pay about $490,000 in taxes on unreported income in those years.